Raghuram Rajan on Realty sector

The Real Estate Sector has not been performing adequately from a long time and the proposal of RBI Governor Raghuram Rajan is not favored by the Realtors in context of lowering property prices to encourage more people to buy.

It is due to increasing unsold stocks and delays in project completions the industry is facing slowdown and reducing more prices would surge chaos as according to Confederation of Real Estate Developers’ Associations of India (CREDAI) president, Getamber Anand price of 90 per cent of the residential supply in the country has already corrected. “If prices fall further, it will lead to non-performing assets (NPAs) and non-delivery of projects,” says Anand.

Pawan Kumar Dhoot, Managing Director, Dhoot Group also holds the same sentiment as according to him it is not a viable option to uplift the prevalent slump in the sector. He explains RBI has already offered deduction by 1.5 per cent cumulatively since January last year and earlier this month the policy rate was cut by 0.25 per cent to 6.5 per cent which is lowest level in more than five years.

Getamber Anand also clarifies the RBI statement by saying “His (RBI Governor) statement should not be taken out of context as he has recommended an adjustment and not necessarily a price cut. The adjustment could be through other ways like easy payment scheme to attract home buyers.”

Amongst all the dialect, the main aim of RBI Governor is to encourage investment in the real estate industry which according to him can be achieved if convenience is on investor’s side for which he adds, “There is an issue of certainly how they see the housing market and how they see prices. There has to be an adjustment so that more people want to go and buy.”